20150408-大华继显-Regional_Morning_Notes_20页_1mb

Regional Morning Notes Summary - April 8, 2015

Core Content Overview

This document provides a summary of key financial updates and investment recommendations for several companies in Asia, including China, Indonesia, Malaysia, and Singapore, as well as market indices and corporate events. It includes detailed results, financial assumptions, and valuation analysis for each company.

Main Points

China: MicroPort Scientific Corporation (853 HK)

• 2014 Performance:
  • Revenue increased by 134.3% to US$355.3m, driven by the consolidation of OrthoRecon.
  • Net loss of US$59.6m, lower than expected, due to slowed DES product sales and higher operating expenses.
• 2015 Outlook:
  • The company expects the worst to be over, with improved performance from the restructuring of OrthoRecon and increased sales of new DES products (Firehawk).
  • Management is confident that EBITDA will reach breakeven by 2015 and that the OrthoRecon business will be self-sustaining by 2016.
• Recommendation:
  • Upgraded to BUY with a target price of HK$5.50, indicating a 35.5% upside.
• Key Financials (2014 - 2017F):
  • Revenue: US$355.3m (2014), US$369.1m (2015F), US$395.8m (2016F), US$429.3m (2017F).
  • Net Profit: US$-59.5m (2014), US$-30.1m (2015F), US$2.8m (2016F), US$18.4m (2017F).
  • Net Margin: -16.7% (2014), -8.2% (2015F), 0.7% (2016F), 4.3% (2017F).
• Valuation Metrics:
  • PE (2015F): 25.3x.
  • EV/EBITDA (2015F): 32.1x.
  • P/B (2015F): 2.4x.
• Risks:
  • Tender price cuts and slower progress.
  • Risks in M&A and business integration.
  • Slower recovery in the US and EU markets.
  • Intensifying competition.
  • Risks in R&D and new product launches.

Indonesia: Mitra Adiperkasa (MAPI IJ)

• CVC Investment:
  • CVC investment could boost MAPI's net income by fourfold in 2015.
  • MAPI is injecting its operations into MAP, including brands like Adidas, Reebok, and Payless.
• 2014 Performance:
  • Net income was Rp74.1b, but with the elimination of interest costs, it could rise to Rp360.5b in 2015.
  • MAPI's debt was Rp1,567.4b, which will be used to repay loans.
• Market Valuation:
  • MAPI is trading at 32.3x 2015F PE and 19.3x 2016F PE.
  • It is near 1 SD below in terms of P/B valuation.
• Segmental Analysis (2014):
  • Specialty Stores: 65.2% of total sales, 95.0% of total operating profit.
  • Department Stores: 22.0% of total sales, 0.3% of operating profit.
  • Food & Bev: 13.1% of sales, -4.4% of net income.
• Recommendation:
  • Not rated, but considered as a BUY in the context of its strategic moves and potential for value creation.
• Risks:
  • Rupiah depreciation could raise COGS.
  • Earnings may miss in 2015 due to ongoing challenges in the F&B segment.
  • Slower-than-expected recovery in the F&B segment.

Malaysia: KPJ Healthcare (KPJ MK)

• 2015 Outlook:
  • Management remains confident that margins will be sustained at pre-GST levels.
• Recommendation:
  • HOLD with a target price of RM4.31.
• Stock Data:
  • Market cap: RM1,856.5m.
  • 3-mth avg daily turnover: RM0.8m.
• Key Financials:
  • No specific financial figures are provided, but the focus is on maintaining margins.

Singapore: Triyards Holdings (ETL SP)

• 2014 Performance:
  • Earnings were lower due to timing differences.
  • Secured US$100m of contracts.
• 2015 Outlook:
  • Earnings assumption and target price have been revised.
• Recommendation:
  • BUY with a target price of S$1.05.
• Stock Data:
  • Market cap: S$1,050m.
  • 3-mth avg daily turnover: S$0.4m.

Key Indices

Corporate Events

Summary of Key Recommendations

• BUY:

  • MicroPort Scientific Corporation (853 HK): Target price HK$5.50, 35.5% upside.
  • Sunac China (1918 HK): Target price HK$7.97, 14.3% upside.
  • ICBC (1398 HK): Target price HK$6.80, 16.2% upside.
  • Bank Negara (BBNI LJ): Target price Rp7,500, 3.1% upside.
  • Genting Msia (GENM MK): Target price RM4.47, 2.5% upside.
  • DBS (DBS SP): Target price S$23.55, 15.9% upside.
  • Pacific Radiance (PACRA SP): Target price S$1.00, 48.1% upside.
  • Krong Thai Bank (KTB TB): Target price Bt29.00, 23.9% upside.
  • Sino Thai Engr (STEC TB): Target price Bt30.25, 38.8% upside.

• SELL:

  • UMWH Holdings (UMWH MK): Target price RM10.00, 10.2% downside.

Key Assumptions

Summary of Investment Catalysts

• MicroPort Scientific Corporation (853 HK):
  • Acceleration of tender progress.
  • Restructuring and consolidation of OrthoRecon.
  • Expected growth in Firehawk sales.
• Mitra Adiperkasa (MAPI IJ):
  • CVC investment to boost net income.
  • Listing of MAP as a potential catalyst.
  • Operational improvements from CVC expertise.

Summary of Risks

• MicroPort Scientific Corporation (853 HK):

  • Tender price cuts.
  • Slower-than-expected tender progress.
  • Risks in M&A and business integration.
  • Slower recovery in the US and EU.
  • Intensifying competition.
  • Risks in R&D and new product launches.

• Mitra Adiperkasa (MAPI IJ):

  • Rupiah depreciation.
  • Earnings may miss in 2015.
  • Slow recovery in the F&B segment.